The textile industry has given a thumbs up to the Reserve Bank of India’s (RBI) move to reduce the repo rate, the rate at which the central bank of a country lends money to commercial banks during shortage of funds. The step is being seen as a positive development at the current juncture since it is expected to push up investments in textile industry.
The RBI governor Raghuram Rajan announced a repo rate cut of 50 basis points, to 6.75 per cent from 7.25 per cent, with immediate effect while releasing the monetary policy on September 29, 2015. This is RBI's fourth repo rate cut in the year 2015.
Looking at it as a growth trigger for the economy, Texprocil Executive Director, Siddhartha Rajagopal said that rate cut also means RBI doesn’t anticipate inflation as a key risk to Indian economy. A Sakthivel, President of Tirupur Exporters' Association (TEA) also welcomed the RBI decision. TEA in its statement said banks should pass on this benefit to their customers. This will trigger more investments and export.